Fesco requires $710 mn to improve power system

Faisalabad: The Faisalabad Electric Supply Company (Fesco) has required total investment of $710 million during 2008-17 to improve power distribution infrastructure through system rehabilitation, augmentation, and expansion; and relieve the power system from distribution bottlenecks and constraints; enable continued operation and maintenance in accordance with best international practices; and commercial operations.

According to offical sources, the Asian Development Bank (ADB) will provide financial assistance to Fesco for launching 'Energy Investment Plan'. According to ADB study, the distribution companies (DISCOs) including Fesco plan to fund 40 percent of this through self-generated funds and the rest through borrowing from the Asian Development Bank (ADB) and other financiers.

The federal government is actively looking for funds from the private sector and other agencies, but other financiers have not been confirmed. ADB's proposed multitranche financing facility (MFF) will act as the anchor for the investment plan. Financing of the immediate and urgent sub-projects planned for tranches 1 and 2 will provide additional revenues for DISCOs to carry out further system enhancements. The investment program support component, funded from ADB's Asian Development Fund (ADF) resources, will assist DISCOs to structure the sub-projects so they can attract investment from other sources.

The power sector entities, specifically the DISCOs, including Fesco lack the required level and mix of skills or support systems necessary to operate as independent entities covering the whole range of electricity business requirements. Improvements in corporate governance and support systems are required.

A support component is an integral part of the proposed Investment Program. The total cost of the Investment Program's support component is estimated at $10 million for the duration of the Investment Program. The objective of the component is to provide both resources and capacity to enable the DISCOs to improve and expand their current project preparation, implementation, and monitoring capabilities.

Support activities will be developed to cover (i) general power distribution business management, including project implementation, portfolio review, project management, and program management; (ii) technical operation and maintenance; (iii) accounting, financial and economic management, and financial reporting; (iv) contracting, procurement, and inventory management; (v) a management information system and economics of cost recovery and tariff setting; and (vi) project development, including policy development, a feasibility study, site identification, and project design.

This Investment Program focuses on power distribution. In order to enable the power to be effectively, reliably, and safely delivered to existing and new customers, the power distribution companies (DISCOs), including Fesco, in co-ordination with the Ministry of Water and Power have prepared the Power Distribution Sector Road Map, 2008 -17.

Based on current system demand and load growth forecasts in each region, the road map recommends short (priority), medium-, and long-term system improvement projects and details the investment needs. The objective of the road map is to show how the eight DISCOs, including Fesco can deliver reliable and high-quality power supply to the rising number of industrial, commercial, agricultural, and domestic customers.